Definition
A stock reservation sets aside on-hand quantity for a specific customer order, so it isn't promised to anyone else or used for something else.
Stock reservation meaning: on hand vs available
Reserving stock separates what is physically in the warehouse from what is free to sell. Available stock is on-hand stock minus reservations, and that’s the figure salespeople should quote from.
Example: a warehouse holds 120 valves; a confirmed order reserves 80, so only 40 are available to promise for new orders, even though 120 sit on the shelf.
Reservations are usually made when an order is confirmed and released when it ships, is cancelled or is put on hold. A soft reservation is a planning flag; a hard allocation physically blocks specific stock for one order.